Following Microsoft's Money

Steven Weiss was clearly surprised as he looked over a summary
of Microsoft's political contributions to Republicans and Democrats
for this election cycle.

Weiss is a spokesman for the Center for Responsive Politics (CRP),
which maintains a searchable database of Federal Election Commission
(FEC) records of political donors and recipients at its Web site,
www.opensecrets.org. He was reviewing a report on his group's site
that rolled up contributions from individual Microsoft employees,
the Microsoft Political Action Committee and soft money over the
last eight election cycles.

"Look at that! That's interesting," he mused. In the
2004 election cycle the formerly Republican-leaning company's political
contributions have undergone a massive shift to favor Democrats.

When the Department of Justice antitrust case during the Clinton
administration became a major threat to Microsoft's future, Microsoft's
political giving ballooned and became reliably Republican. The 1998
election cycle saw Microsoft's federal contributions to Republicans
outpacing Democrats 64 percent to 36 percent. The Republican share
dipped to 53 percent in 2000 but ballooned back up to 60 percent
in 2002.

For the 2004 election cycle, at least through late August, the
figures are reversed. Democrats got 61 percent of all forms of Microsoft
political contributions and Republicans got 39 percent. Has Microsoft
had a change of political heart?

Big Three
It appears so, especially at the individual employee level. Every
contribution comes down to the company's interest and a candidate's
positions, but three issues are coming into play in 2004: soft money,
political action committees and employee contributions.

The McCain-Feingold campaign finance legislation ended the soft
money loophole, which allowed unlimited contributions to political
parties. Critics charged soft money let companies get around the
law that prohibits them from giving directly to candidates. Microsoft
used soft money to pour more than $2.7 million into the political
process in the 2002 election cycle. That money went to the Republican
column at better than a two-to-one ratio. Microsoft does not appear
to have diverted that spending into the issue-oriented 527 groups
such as MoveOn.org and Swift Boat Veterans for Truth that are partly
taking the place of soft money.

*Total of reported contributions
from Microsoft employees and the Microsoft Political Action
Committee in the 2004 election cycle.
Source: Center for Responsive Politics.

The company is, however, picking up some of the soft money slack
through the Microsoft Political Action Committee (PAC), a semi-official
arm of Microsoft public policy. By mid-August, the Microsoft PAC
had given a total of $1.58 million to federal candidates, parties
and other PACs, up from its own high of $1.23 million for the entire
2002 election cycle. Despite adding a former Bush White House aide,
Edward Ingle, as treasurer in 2003, the PAC has swung more money
toward Democratic candidates although it still leans Republican
overall. As of Aug. 4, contributions to federal candidates favored
Republicans by 53 percent to 47 percent. In 2002 the PAC favored
Republicans 58 percent to 42 percent and in 1998 it favored Republicans
by a whopping 67 percent to 33 percent.

With company contributions down, that leaves Microsoft employees—many
of them millionaires—accounting for a larger percentage of
the overall Microsoft contribution tab. According to a custom run
of FEC data conducted for Redmond magazine by the CRP, individual
Microsoft employees gave a total of $1.13 million dollars in this
election cycle, an amount rivaling Microsoft's PAC. (The figure
only includes contributions of $200 or more, an amount that triggers
a requirement that a PAC, party or political campaign request the
donor's name and occupation and report it to the FEC.)

(Click image for larger version.)

As a group, Microsoft employees overwhelmingly favor Democrats—73
percent of their contributions have gone to Democrats, up from about
55 percent in the 2000 election cycle, when employees gave a collective
$1.45 million. Through July 5 of this year, employees contributed
$442,635 to Democratic nominee John Kerry, the Democratic National
Committee and other Democratic presidential candidates versus $187,135
to President George W. Bush and the Republican National Committee.

Rationales for the employee change of heart could range from the
fact the protracted DOJ battle waged by the Clinton administration
is a thing of the past to widespread disagreement with the war in
Iraq—and everything else that separates Democrats and Republicans.

Who Is Microsoft Backing?
Bill Gates, at least, seems to have no fear of Democrats. Of the
$22,500 in political contributions he made, more than half went
to Democrats. Steve Ballmer, on the other hand, favored Republicans
by nearly a 2-to-1 ratio. They agreed on one thing: each gave a
personal contribution of $2,000 to Bush and nothing to Kerry (see
"Gates and Ballmer Short Lists").

(Click image to view larger version.)

The Microsoft PAC followed a similar tack, giving $5,000 to Bush
but nothing directly to Kerry's campaign. But the PAC was even-handed
with respect to the two major political parties, giving $30,000
to the Republican National Committee and $30,000 to the DNC Services
Corp. Other recipients of Microsoft PAC money aren't so well known.
They range from Every Republican is Crucial PAC, Keep Our Majority
PAC, Pete's PAC (affiliated with Sen. Pete V. Domenici, R-NM), Rely
on Your Beliefs and, of course, the Washington Fund. (For a full
list, click here.)

It's worth noting that the Microsoft PAC built itself from almost
nothing to among the most formidable in Washington in just eight
years. In 1996, Microsoft gave $43,500 to federal candidates. In
the 2004 cycle, as of late August Microsoft had given $857,000.
That amount ranks it 42nd among all of the several thousand PACs
in contributions to federal candidates, according to CRP. No other
company in the computer/Internet sector is even close to matching
Microsoft's largesse, according to the group. Siebel Systems is
second at $277,500 and Intel third at $188,364.

(Click image to view larger version.)

Other Avenues of Influence
Microsoft does have avenues of influence other than political contributions.
Any savings Microsoft could have gotten from its reduced soft money
expenditures have been offset by Microsoft's lobbying budget. After
spending about $6.5 million each year on lobbying in 2001 and 2002,
according to records filed with the U.S. Senate, Microsoft cranked
up its spending to $8.7 million in 2003—a 34 percent jump.

"There was some difficult work being done in 2003 around
specific technology issues like spam," says Ginny Terzano,
a spokeswoman in Microsoft's Washington office and a former Clinton
White House staffer. "We put a lot of resources in terms of
making sure that we were most helpful to key legislators on legislation
like the spam bill."

(Click image to view larger version.)

Microsoft's lobbying filings with the Senate show some of the other
issues about which the company approached the White House, Congress
and numerous federal agencies. Many of the contacts involved influencing
government procurement in the software industry, sort of a government
sales call. Company lobbyists also approached the government repeatedly
about visa regulations for foreign workers, tax issues and rules
governing the WiFi spectrum.

Government records on a company's public affairs spending are
like getting a glimpse of a few of an octopus' tentacles sticking
out of a cave. Outside observers say Microsoft is sophisticated
at other types of influence that do not require reporting, such
as sponsoring policy forums, contributing to key political figures'
pet charities, supporting like-minded think tanks and attempting
to ignite grassroots support through efforts like the Microsoft
Freedom to Innovate Network Web site. Terzano notes that Microsoft
donated nearly $1 million in software and technical support services
to both the Democratic and Republican conventions this year.

(Click image to view larger version.)

What Does Microsoft Want?
Terzano says Microsoft's aim is to support candidates whose interests
align with those of Microsoft and the IT industry. "We're contributing
to the overall political process, which is a good thing," Terzano
says. "What the Microsoft PAC has traditionally done is given
to incumbent candidates who have been helpful to the company or
the sector overall," citing trade and spyware as examples.
The company supports candidates, "who have taken a genuine
interest in these hard, complex technology issues that are often
emerging."

Critics of Microsoft say the company's spending in Washington
supports one main purpose—maintaining the Windows monopoly
that the Bush Administration's DOJ declined to break up. "A
PAC of just $1 million or $2 million is considered huge in Washington,"
says Ed Black, president and CEO of the Computer and Communications
Industry Association. "That's a pittance for Microsoft to protect
its monopoly."

(Click image to view larger version.)

Microsoft certainly got a big assist from some of its friends on
the Hill in March when the European Commission (EC) ordered a record
$613 million fine against Microsoft for European antitrust violations.
As soon as Microsoft CEO Steve Ballmer reacted by bashing the Europeans'
decision, a chorus of U.S. representatives and U.S. senators took
up Microsoft's standard.

On a Web page, Microsoft's Freedom to Innovate Network collected
quotes from 33 members of the U.S. House and Senate, all supporting
Microsoft's position against the EC fine. A comparison of those
quotes against Microsoft PAC contributions for the last three election
cycles shows that 31 of those elected representatives got money—between
$1,000 and $30,000—from the Microsoft PAC.

(Click image to view larger version.)

Quin Monson, an assistant professor of political science at Brigham
Young University, says the Freedom to Innovate example leaves open
the question of cause. "You can show the correlation. Is it
the fact that they made the donation and then made the statements?
Or have they cultivated a friendship because the senator was already
predisposed toward Microsoft's positions?"

Donors are motivated either by ideology or the desire to gain
access to politicians, Monson says. "You can pretty clearly
classify Microsoft as an access-type donor. What they're really
getting for their money is access to politicians. All they really
want is to be able to make their case. You get listened to when
you're part of the donor list."

More Information

Microsoft Corp.
PAC Contributions Total of all contributions
from the Microsoft Political Action Committee to federal
candidates, party committees and leadership PACs, 2003-2004*

Candidate
or Organization

Amount

Date

13th Colony Leadership
Cmte

$1,000

3/24/2004

Alliance for the West

$1,500

5/5/2004

Alliance for the West

$3,500

6/18/2004

American Liberty PAC

$1,000

3/17/2003

American Success PAC

$1,000

2/14/2003

American Success PAC

$1,000

7/25/2003

American Success PAC

$500

12/9/2003

American Success PAC

$5,000

2/18/2004

Americans for a Republican
Majority

$5,000

3/11/2003

Americans for a Republican
Majority

$5,000

6/4/2004

America's Foundation

$1,000

4/8/2003

America's Foundation

$1,000

4/14/2003

America's Foundation

$2,500

8/20/2003

America's Foundation

$5,000

2/18/2004

America's Majority Trust

$1,000

2/28/2003

America's Majority Trust

$1,000

9/24/2003

America's Majority Trust

$5,000

3/16/2004

AmeriPAC: The Fund for
a Greater America

$2,500

3/22/2004

Battle Born PAC

$500

12/4/2003

Battle Born PAC

$2,500

4/30/2004

Big Tent PAC

$5,000

3/24/2004

Bluegrass Cmte

$5,000

6/23/2003

Bluegrass Cmte

$5,000

5/6/2004

Cmte for a Democratic
Majority

$5,000

3/19/2004

Cmte for the Preservation
of Capitalism

$1,000

12/9/2003

Cmte for the Preservation
of Capitalism

$1,000

4/30/2004

Common Sense Leadership
Fund

$2,000

10/23/2003

Common Sense Leadership
Fund

$1,000

6/16/2004

Congressional Black
Caucus PAC

$2,000

1/28/2003

Congressional Black
Caucus PAC

$1,000

2/24/2004

DAKPAC

$1,000

1/28/2003

Daniel Webster PAC

$5,000

4/13/2004

DASHPAC

$5,000

5/15/2003

DASHPAC

$1,000

4/30/2004

DASHPAC

$1,000

4/30/2004

Democratic Congressional
Campaign Cmte

$1,000

2/14/2003

Democratic Congressional
Campaign Cmte

$15,000

3/17/2003

Democratic Congressional
Campaign Cmte

-$1,000

12/30/2003

Democratic Congressional
Campaign Cmte

$15,000

1/29/2004

Democratic Senatorial
Campaign Cmte

$15,000

3/17/2003

Democratic Senatorial
Campaign Cmte

$15,000

1/29/2004

Democrats for the Future

$1,000

2/12/2004

Democrats for the Future

$1,000

6/15/2004

DNC Services Corp

$15,000

4/20/2003

DNC Services Corp

$15,000

1/29/2004

Every Republican is
Crucial PAC

$2,500

3/17/2003

Every Republican is
Crucial PAC

$1,000

5/6/2003

Every Republican is
Crucial PAC

$1,000

11/13/2003

Every Republican is
Crucial PAC

$5,000

6/15/2004

Freedom Project

$1,000

2/28/2003

Freedom Project

$1,000

12/9/2003

Friends of the Big Sky

$1,500

2/14/2003

Friends of the Big Sky

$1,500

2/18/2004

Future Leaders PAC

$1,000

12/9/2003

Future Leaders PAC

$2,000

4/26/2004

Glacier PAC

$5,000

7/25/2003

Glacier PAC

$5,000

6/29/2004

Good Government for
America

$5,000

9/30/2003

Good Government for
America

$5,000

6/4/2004

Great Plains
Leadership Fund

$5,000

4/2/2003

Great Plains Leadership
Fund

$2,500

6/4/2004

HILLPAC

$5,000

10/9/2003

HILLPAC

$2,500

3/16/2004

Keep Our Majority PAC

$2,000

2/28/2003

Keep Our Majority PAC

$2,500

6/16/2003

Keep Our Majority PAC

$500

12/9/2003

Keep Our Majority PAC

$2,500

4/30/2004

KPAC

$1,000

6/14/2004

Leadership PAC 2002

$2,000

1/28/2003

Lone Star Fund

$1,000

9/15/2003

M-PAC

$5,000

4/14/2003

National Leadership
PAC

$2,500

10/9/2003

National Republican
Congressional Cmte

$15,000

3/17/2003

National Republican
Congressional Cmte

$15,000

1/29/2004

National Republican
Senatorial Cmte

$15,000

3/17/2003

National Republican
Senatorial Cmte

$15,000

1/29/2004

Nebraska Leadership
PAC

$5,000

5/14/2004

New Millenium PAC

$1,000

9/15/2003

New Millenium PAC

$2,500

3/23/2004

New Millenium PAC

$1,000

6/15/2004

New Republican Majority
Fund

$5,000

3/20/2003

Northern Lights PAC

$5,000

4/24/2003

Northern Lights PAC

$1,000

2/12/2004

Northern Lights PAC

$4,000

5/6/2004

Ohio's 17 Star PAC

$1,000

8/20/2003

PAC to the Future

$1,000

3/26/2003

PAC to the Future

$1,000

6/23/2003

PAC to the Future

$1,000

7/25/2003

PAC to the Future

$5,000

4/20/2004

Pete's PAC

$2,500

7/16/2003

Promoting Republicans
You Can Elect

$1,000

12/12/2003

Promoting Republicans
You Can Elect

$1,500

4/13/2004

Rely on Your Beliefs

$1,000

3/17/2003

Rely on Your Beliefs

$2,000

5/15/2003

Rely on Your Beliefs

$2,000

9/30/2003

Rely on Your Beliefs

$5,000

4/7/2004

Republican Majority
Fund

$4,000

10/9/2003

Republican National
Cmte

$15,000

10/31/2003

Republican National
Cmte

$15,000

1/29/2004

Republican Party of
Florida

$5,000

6/4/2004

Republican Party of
Kentucky

$2,500

4/26/2004

Republican Party of
Washington

$5,000

2/13/2004

Republican Party of
Wisconsin

$500

10/9/2003

Searchlight Leadership
Fund

$5,000

6/23/2003

Searchlight Leadership
Fund

$5,000

6/23/2003

Senate Victory Fund

$2,000

6/16/2004

SNOWPAC

$1,000

6/24/2004

Stearns, Cliff

$1,000

3/26/2003

Superior California
Fed Leadership Fund

$5,000

4/13/2004

Texas Freedom Fund

$2,500

3/12/2004

Texas Freedom Fund

$2,500

6/4/2004

Texas Republican Congressional
Cmte

$5,000

4/30/2004

To Organize a Majority
PAC

$5,000

6/4/2004

Together for our Majority

$5,000

3/11/2003

Volunteer PAC

$5,000

3/17/2003

Washington Fund

$2,000

12/12/2003

Wisconsin Leadership
PAC

$2,000

7/16/2003

Wisconsin Leadership
PAC

$2,000

12/9/2003

Wisconsin Leadership
PAC

$5,000

6/23/2004

TOTAL
DEMOCRATIC

$176,500

TOTAL REPUBLICAN

$285,000

TOTAL
CONTRIBUTIONS

$461,500

*Based on data released electronically by
the Federal Election Commission on August 5, 2004.

SOURCE: Center for Responsive Politics.

Microsoft Employee
Contributions Total of all reportable ($200+)
contributions to federal candidates, party committees and
leadership PACs, 2003-2004*

Candidate
or Organization

Amount

MICROSOFT CORP.

Abu-Ghazalah, Maad (D)

$300

Alben, Alex (D)

$20,600

Ameri, Goli Yazdi (R)

$300

Americans for a Republican
Majority

$5,000

Badnarik, Michael (L)

$5,000

Baird, Brian (D)

$19,000

Baldwin, Tammy (D)

$250

Barbieri, Donald K (D)

$9,000

Behrens-Benedict, Heidi
(D)

$2,500

Bluegrass Cmte

$1,000

Blunt, Roy (R)

$1,000

Bowles, Erskine B (D)

$1,250

Boxer, Barbara (D)

$250

Braun, Carol Moseley (D)

$500

Bromm, Curt (R)

$2,000

Burr, Richard

$500

Bush, George W (R)

$179,740

Cantwell, Maria (D)

$21,150

Chandler, Ben (D)

$500

Clark, Wesley (D)

$8,000

Clinton, Hillary Rodham
(D)

$1,000

Daschle, Tom (D)

$1,000

Dean, Howard (D)

$52,122

DeGette, Diana (D)

$250

Democracy for America

$250

Democratic Central Cmte
of

$9,674

Democratic Congressional
Campaign

$37,000

Democratic Senatorial
Campaign Cmte

$35,315

Democratic State Central

$250

Dicks, Norm (D)

$500

DNC Services Corp

$220,710

Dodd, Chris (D)

$1,000

Dorgan, Byron L (D)

$12,000

Dunn, Jennifer (R)

$9,500

Edwards, John (D)

$6,550

Farrell, Diane Goss (D)

$1,000

Feingold, Russell D (D)

$2,000

Ford, Harold E Jr (D)

$2,000

Frost, Martin (D)

$2,000

Gephardt, Richard A (D)

$3,500

Glenn, Dylan C (R)

$1,000

Good Government for America

$1,000

Grassley, Chuck (R)

$8,000

Hague, Jane (R)

$1,250

Inslee, Jay R (D)

$54,750

Jindal, Bobby (R)

$500

Johnson, Nancy L (R)

$1,000

Keep Our Majority PAC

$2,000

Kerr, Alice Forgy (R)

$500

Kerry, John (D)

$133,543

Kolbe, Jim (R)

$500

Kucinich, Dennis J (D)

$3,250

LaRouche, Lyndon H Jr
(D)

$250

Larsen, Rick (D)

$21,700

Leahy, Patrick (D)

$12,750

Lee, Conrad (R)

$2,950

Libertarian National Cmte

$2,250

Lieberman, Joe (D)

$14,960

Martinez, Mel (R)

$1,000

Matheson, Sandra Jeanne
(D)

$809

McCain, John (R)

$9,000

McDermott, Jim (D)

$500

McKinney, Cynthia A (D)

$250

McMorris, Cathy (R

$1,000

Meek, Kendrick B (D)

$250

Meshell, Jason David Castle
(R)

$1,000

Murkowski, Lisa (R)

$500

Murray, Patty (D)

$37,902

Musgrave, Marilyn (R)

$500

National Republican Senatorial
Cmte

$1,500

Nelson, Ben (D)

$250

Nethercutt, George R Jr
(R)

$27,020

New Apollo Energy

$2,500

Obama, Barack (D)

$1,000

Pomeroy, Earl (D)

$250

Prats Palerm, Roberto
L (3)

$1,000

Quigley, Lisa (D)

$250

Rangel, Charles B (D)

$500

Reichert, Dave (R)

$1,050

Reid, Harry (D)

$12,000

Rely on Your Beliefs

$1,500

Republican National Cmte

$7,395

Republican Party of Washington

$2,815

Ross, Dave (D)

$500

Ryan, Jack (R)

$1,000

Schumer, Charles E (D)

$1,000

Sessions, Jeff (R)

$3,000

Sessions, Pete (R)

$3,000

Smith, Adam (D)

$21,750

Specter, Arlen (R)

$14,500

Tauscher, Ellen (D)

$3,000

Tauzin, Billy III (R)

$500

Tebelius, Diane (R)

$500

Thune, John (R)

$3,000

Toomey, Pat (R)

$3,000

Turman, Christopher Madison
IV (D)

$2,000

Udall, Mark (D)

$4,000

Westmoreland, Lynn A (R)

$1,000

Wexler, Robert (D)

$9,450

Wisconsin Leadership PAC

$2,000

Wolf, Frank R (R)

$250

Wyden, Ron (D)

$2,000

Democrats

$812,785

Republicans

$303,770

Other

$3,450

MICROSOFT CORP. TOTAL

$1,120,005

WEBTV NETWORKS (MICROSOFT
CORP.)

Cantwell,
Maria (D)

$3,000

Kerry, John (D)

$2,000

Landrieu, Mary L (D)

$1,000

Lincoln, Blanche (D)

$1,000

Mikulski, Barbara A (D)

$1,000

Murray, Patty (D)

$1,000

Democrats

$9,000

Web TV Networks Total

$9,000

TOTAL DEMOCRATIC

$821,785

TOTAL REPUBLICAN

$303,770

TOTAL OTHER

$3,450

TOTAL
CONTRIBUTIONS

$1,129,005

*Based on data released electronically by
the Federal Election Commission on August 5, 2004.

SOURCE: Center for Responsive Politics.

Relevant Links

The non-profit Center for
Responsive Politics is set up to allow free searches of federal
political contributions by donor and by recipient. The center
also maintains extensive resources about election law and hundreds
of pre-sorted reports.

Want to see for yourself what Microsoft, or any other lobbying
group's priorities are in Washington? The U.S. Senate maintains
its legally required lobbying reports here.

The settlement in the United States v. Microsoft antitrust case
was open to public comments. One
of the filed comment documents focuses on Microsoft's efforts
to influence public opinion (through political contributions,
advertising and other means) during the antitrust case. Investigative
reporter Edward Roeder was hired to prepare the heavily footnoted
document for the Computer & Communications Industry Association,
a tech industry group that frequently criticizes Microsoft.